Sony Gutting 16,000 Jobs

As economic hardships continue to creep deeper into the gaming industry, Sony is the latest company to put jobs on the chopping block to save its hide.

In an effort to cut $1.1 billion in annual costs from its electronics division, Sony announced it will be restructuring investments, outsourcing production, and pulling out of non-lucrative businesses by 2010. A total of 8,000 permanent jobs and 8,000 temporary positions are scheduled to be axed, as part of the plan. Even the world's second largest consumer electronics producer isn't immune to the effects of the major economic downturn.

"The reason for this move is the deterioration of the economy, which was much larger than we expected," Sony's senior vice president Naofumi Hara told Bloomberg. The company's net income is expected to drop by 59 percent for the year ending March 31.

Chopping approximately five percent of its electronics workforce is a big move for Sony but not an entirely unexpected one. The weakening value of the U.S. dollar and the growth in the value of yen spurred Sony to seek reductions in production costs earlier this year. Also, a growing number of game companies are resorting to laying off employees to try to stem the flow of cash rapidly slipping through the cracks.

It's hard to say what this specifically means for Sony's gaming-related endeavors, but it's not a good sign of things to come. Without an economic turnaround, don't be surprised to see other major companies taking drastic measures to stay afloat.